Designing and Managing a Subaward Program

Overview

Congratulations! If you're engaging in this lesson you have probably been chosen to be an intermediary organization – an organization that has been given a large sum of money in order to make grants to other groups. Many references within this lesson are specific to an intermediary that is leading a Federally-funded subaward program, but most of the content applies to any type of subaward program, publicly funded or not. By the end of this lesson you will be able to identify the key components of a subaward plan, recall outreach strategies, and effectively manage your subaward program.

This lesson will prepare you to design and manage a successful subaward program.

This lesson goes through the steps for creating a subaward plan, which is a written document describing the steps you will take to implement your program. A written plan may or may not be required by your program office before you begin implementing your program. However, by following the steps required to write a subaward plan you will design an effective and thoughtful subaward program that is likely to reach its stated goals.

Let’s begin with some key definitions.

Intermediary Organization: An intermediary organization is responsible for distributing a sum of money, or an award, to other organizations in the form of grants, or subawards. An intermediary is usually larger and more experienced than the organizations receiving the subawards.

Subaward: The U.S. Department of Health and Human Services Code of Federal Regulations (45 CFR Part 74) defines a subaward as “an award of financial assistance in the form of money, or property in lieu of money, made under an award by a recipient [or intermediary organization] to an eligible sub-recipient.”

Sub-Recipient or subawardee: The same section of the Code of Federal Regulations (45 CFR Part 74) defines a sub-recipient as “the legal entity to which a subaward is made and which is accountable to the recipient [or intermediary organization] for the use of the funds provided.” In this guide we will use the term “Subawardee” to refer to the organizations that have received subawards.

Program Officer: A program officer is the representative of a funding source responsible for monitoring the compliance and success of a set of grants. Federal programs might use the titles “Federal Project Officer,” “Federal Program Officer,” or “Federal Program Specialist” to refer to this person. In this guide we often use the term “program officer” to refer to the representative of your funding source – whether it is a Federal, state or local government, or private entity.

Program: We use this term to refer to your subaward program.

Project: This term refers to the set of activities that your subawardees will carry out using their subaward.

CHAPTER 1: Creating a Subaward Plan

A subaward plan is useful beyond being a requirement for your Federal program. It provides structure for your program. Developing one requires you to think deeply about your purpose and the activities likely to help you reach your goals. It forces you to design ways to ensure accountability, and ways to measure results. You will find it is a document you will frequently consult as you implement your subaward program.

Why create a subaward plan?

Because a Federal subaward program involves the granting of Federal funds from a Federal grantee to sub-recipients, most if not all Federal grant programs involving subawards require grantees to develop and submit subaward plans for approval to the program's Federal program officer. The program announcement for the grant program usually contains the information and elements required for the subaward plan. Additional information may be supplied by the Federal program officer to help intermediaries develop plans that meet Federal guidelines and requirements as well as particular grant program purposes.

The Department of Health and Human Services and other Federal agencies offer grant programs for intermediary organizations that include subaward plans as a part of the application and program implementation requirements. These Federal grant programs usually require the intermediary organizations to sub-grant significant portions of the award to eligible local faith-based and community organizations, and to outline their plans to provide subawards in their grant applications – in other words, these Federal programs require a subaward plan.

Check your rules and regulations.

In developing a subaward plan for a Federal funding program, it is essential to know the governing rules and regulations concerning Federal grants and sub-grants. General rules and regulations regarding Federal grants and sub-grants from the Department of Health and Human Services (DHHS) can be found in 45 CFR Part 74. Other Federal agencies have similar governing legislation listed in various titles of the Code of Federal Regulations. Every intermediary organization that has received or desires to receive grants from a Federal agency should become familiar with the Code of Federal Regulations for that particular agency, not only for information regarding subawards but also for guidance on Federal grant management.

There are six key components of a subaward plan.

1. Determine your purpose. The first step in developing your subaward plan is to determine the reason or purpose underlying the effort. In other words, why will you conduct a subaward program? What impact do you want to have on the community? What change in the organizations receiving awards do you want to see take place?

To identify your purpose, you will need to determine what you want to accomplish and how it fits with the goals and outcomes defined in your grant proposal. Be sure to review the Federal or other program announcement for any information on the purpose of the subawards from the funder’s perspective. Also, if you have already submitted a grant proposal, be sure to review that proposal for guidance and consistency in developing a purpose statement.

A purpose statement usually contains the following elements:

Whom you will work with or serve

What you will do for them

What you expect to be the result or outcome of your work together.

An example is the purpose statement developed by the Christian Community Health Fellowship (CCHF), a national network of Christian health professionals and others concerned about the health care needs of impoverished communities in the U.S. CCHF identified the purpose of their subaward program as assisting "faith-based and community health care organizations to become operationally effective and financially viable providers of community-oriented primary health care in underserved communities and populations." Another intermediary organization stated that the purpose of its awards was to advance community and faith-based organizations' efforts by building their capacity, increasing their efficiencies, and expanding their scope of services.

When creating purpose statements it is helpful to:

Keep your end in mind.

Act as a visionary, and dream a little.

Ask yourself what would improve your community, or those you serve.

Consult potential subawardees to learn what their desired outcomes would be.

2. Decide which types of grants to offer. Once you've determined your purpose, it's time to look at the type - or types - of grants you want to offer to be consistent with that purpose. The “type” of grant will reflect the intended end result(s) of the subawards – a grant to develop an organization’s infrastructure might be an Organizational Development Grant, while a grant to help an organization expand their services to another community might be called a Service Expansion Grant.

To decide on the types of grants you’ll offer, you might ask yourself the following questions:

Which organizations is my program targeting for grants?

What are some typical needs of these organizations?

What activities are likely to help these organizations attain the results stated in the purpose statement?

What size grants do these organizations have the skills and resources to use wisely?

What size grant can help the most?

How many grants can my organization manage and track effectively?

3. Choose your target organizations. In developing your plan, it is important to determine what types of organizations you will target to receive subawards. As you focus on specific types of organizations, you are better able to plan outreach efforts, manage the flow and review of proposals, provide the right training and technical assistance specifically designed for those organizations, and achieve the purpose of your subaward plan.

Before you start to identify the specific type or types of organizations, be sure to check to see if there is any guidance on the issue in the program announcement or in guidelines/directives from the Federal program office (or other funder). For example, the program announcement for the U.S. Department of Labor's Office of Disability Employment Policy's Intermediary Grants for Mentoring Youth with Disabilities stated that intermediary organizations may issue subawards to community or faith-based organizations that:
“have social services as a major part of their mission; are headquartered in the local community to which they provide services; have a total annual operating budget of $300,000 or less; or have 6 or fewer full-time equivalent employees.”

Likewise, HHS’s Administration for Children and Families’ 2009 Strengthening Communities Fund announcement asks that applicants give priority for subawards to organizations “who document they are working with agencies responsible for administering the ACF TANF program (Temporary Assistance for Needy Families)…. whose annual budgets do not exceed $500,000….[and who are] implementing program(s) that address the broad economic recovery issues present in their communities, including helping low-income individuals secure and retain employment, earn higher wages, obtain better-quality jobs, and gain greater access to state and Federal benefits and tax credits.”

As you think about the organizations you will target, there are a few things that you may want to consider as potential criteria for eligibility for subawards:

Faith-based and community-based organizations – Are you planning to make awards available to both faith-based and community-based organizations?

Size of the organization – (determined by the number of staff or size of the budget.) Do you want/need to specify a certain size of organization?

Age of organization – Is it important to target new or emerging organizations? Or are those with experience more likely to achieve the program’s purpose?

Service areas – Do you want to target organizations in a particular service area, consistent with your organization’s mission and/or with the priorities of your Federal or other funder?

Geographic location – Do you want to designate a particular location--neighborhood, city, state, and region? Or do you want to designate organizations in a particular type of location (e.g., urban, rural, suburban)?

Funding history – Do you want to target organizations that have not received Federal funds or other large grants in the past?

Partnerships – Are partnerships of organizations, collaboratives, or alliances eligible for grants?

4. Decide on the total amount of grants, number of grants, and amount of grants to offer. After you have decided on the types of grants you will be offering and the organizations that are eligible, the next step is to determine the total amount you will offer in subawards, the number of subawards you plan to offer, and the amount of each award.

If you are in the process of applying for a grant or have received a grant, it is likely that you have determined the total amount you plan to distribute in subawards. The Federal Program Announcement for your particular grant program also may also provide guidelines for the total amount.

Yet, you still must decide how many subawards you will offer and how much you will provide to each subawardee. Consider the following questions as you make this determination:

Number of Awards

How many subawards can your organization effectively distribute and monitor during the budget period?

What kind of additional training and technical assistance will the subawardees need in order to succeed? Will your organization be able to provide that level of support for the proposed number of subawardees?

Amount of Individual Awards

What size grant amount(s) will make a difference to subawardees?

What size grant amounts will subawardees be able to manage effectively?

What size grant amount is appropriate for the particular grant type(s) that you are considering? (If you are considering more than one type of grant, then you may want to consider different grant amounts for each grant type.)

What size of grant is needed to help an organization achieve the goals stated in your purpose statement?

5. Determine your grant period. You will need to decide how long subaward organizations will have to use and spend their funds. First, be sure to ask your program officer if there are any guidelines or directives for you to follow. If so, you will need to make your decision based on those guidelines. A note on timing for Federal awards: Federal subaward funds generally are spent within the same Federal fiscal year in which they are granted. If circumstances do not allow for adequate time to spend the funds within the same Federal fiscal year, then you may want to extend the budget period to within the calendar year or within a 12-month period from notification of the subaward. Just be sure that the budget period you set for spending subawards meets all the Federal requirements for your particular grant.

6. Create an Outreach Plan. An outreach plan is a key component of your subaward plan. In it you will define how to inform eligible organizations about your program and about how to apply for grants.

CHAPTER 2: Develop a Request for Proposals

Based on the purpose, the targeted groups, the number of awards, the amount per award, and the length of the grant period, you are ready to begin to develop your Request for Proposals. To start, determine what information about and from the applicant you need in order to make effective subaward decisions. In most cases, you will want to request information about the organization itself, its proposed project, the budget of the organization and the requested budget for the project; and any compliance requirements concerning the subaward. Keep in mind that you are seeking proposals to help you choose the organizations that can best make use of your awards. Therefore, carefully decide which information from applicants will help you make effective and informed decisions.

Provide information about your program.

Start your RFP with a page or two of pertinent information about your subaward program.

Include an overview of the grant, and the purpose of the subawards.

Provide a timeframe for the subaward grant process with deadlines.

Clearly list eligibility and funding criteria.

Describe the size of grants.

Describe the purpose of the grants.

Provide a brief description of their responsibilities for completing and submitting reports.

Describe restrictions on the use of subaward funds (this will be discussed further in this section).

Identify any workshops, technical assistance, or support available to applicants.

Provide contact information for your organization.

Let applicants know when you’ll make decisions, how you’ll make decisions, and how you’ll notify them about the results.

Request contact information.

Ask for a) the name of the organization’s leader; b) physical and mailing addresses for the organization; c) the leader’s phone number; d) and the leader’s e-mail address.

Request qualifying information.

Qualifying information will tell you whether an organization is eligible for your subaward program. To decide what to ask, return to your eligibility criteria and formulate questions about them. Use the following table as a guide.

If it is important that organizations have nonprofit status, you might request a copy of the letter from the IRS with a determination of that status.

Request information about the proposed project.

You will need a description of the proposed project – the project that your funds will support. This project information should include:

The project’s purpose

The problem to be addressed, or the goal to be achieved

The outcomes they expect to result from the project, or what will change and how

Activities that will help the organization reach those outcomes

A timeline of when major activities will take place

How the applicant will measure success or achievement of outcomes

You might ask applicants to include their reports to you in the timeline.

Ask the organization to provide a budget for the proposed project. To maintain consistency across proposals, you might create a budget form for them to complete. The budget should list key costs, their importance to the project, and the amount of money allocated to each cost. The proposed budget should not exceed the amount of your largest grant.

Include information about restrictions and requirements.

Based upon your funding source and the purpose of your program, you may have to impose restrictions on the use of your grants. For example, the Federal government has guidelines prohibiting the use of Federal funds for religious purposes. There are also restrictions against using Federal funds for direct fundraising.

You might have other requirements of your subawardees. For example, you may require them to attend monthly training sessions. Perhaps they must participate in your organization’s evaluation of your project by participating in focus groups or completing a survey. Be sure to list these restrictions and requirements in the RFP. Give as much detail as possible, and where you can, estimate the time required to complete the required activity.

For example, New Roots Providence, an HHS-funded intermediary program in Providence, Rhode Island lets applicants know that they can expect to undergo an organizational assessment requiring 10 to 20 hours of agency time. Further, New Roots warns applicants that these mandatory assessments are likely to take place in summer – a busy time for many nonprofits – so that they will plan accordingly.

You will certainly require regular reports from subawardees so that you can monitor progress toward outcomes, as well as the management of their subaward funds. Therefore, you might let applicants know how frequently they will be required to report if selected for a subaward, and give them some idea of the information you will collect.

A written list of restrictions and requirements could be a part of your RFP, with the instruction that the organizational leader sign the document as a condition of applying for the grant. This serves two purposes: 1) it informs the organization of the restrictions and requirements, and 2) a signature helps ensure future compliance from organizations receiving awards.

Consider requesting letters of intent.

If you would like to gauge how many proposals you are likely to receive so that you can better prepare, you may want to request letters of intentorcalls of interest from potential applicants as a part of the RFP process. Letters of intent or calls of interest help you determine the level of applicant interest so that you may plan the number of staff/volunteers needed for the selection process, or determine if you need to engage in further solicitation to boost the number of proposals coming in. They also may help screen out applicants that do not meet your eligibility requirements. These letters or calls of intent should be submitted before you receive any proposals.

To require a letter or call, be sure to put information in your RFP packet or in your announcements asking that potential applicants contact you by email, mail, or phone by a date prior to your proposal deadline.

In fact, you might consider several steps in your application process (a letter of intent, to which only selected organizations may apply; then only selected/screened organizations may move on to the second round). Just be sure to check with your Federal Program Office or other funding source to ensure that your multi-step application process is in compliance with program requirements.

Other considerations.

In designing your RFP packet, be sure to put it in a format that is user-friendly and accessible for your specified audience. You might target the writing to an eighth-grade reading level; many word processing programs will give you a sense of the reading level of your document. If you are targeting organizations created by and for people who speak a language other than English, you may want to translate the packet contents into the appropriate language. Just be sure to decide whether or not you can manage proposals written in those languages, and state that in the RFP.

Finally, provide guidance for completing the proposal. Include clear directions and specify any requirements, such as length of proposal (number of pages to be submitted), deadline for submitting the proposal, need for supporting materials or information to be included with proposal, and the address to which you want the proposal sent.

CHAPTER 3: Outreach Strategies

After designing your packet materials, the next step is to develop and implement an outreach plan. This plan will describe how you will contact and inform eligible organizations about the availability of your awards and how they will obtain the RFP packet. Developing and implementing an outreach plan requires that you create a master list of your contacts, develop a distribution strategy, and provide support to applicants.

Create a master list.

By now, you have identified your targeted groups and organizations. Next, compile a master outreach list (using both email and postal mailing address lists) in order to contact those groups. You can develop your master list by combining a series of lists:

Make personal phone calls to targeted and influential groups to invite them to apply, and to ask for their help in outreach.

Make presentations to targeted audiences at organizational meetings, conferences, trainings.

Place notices in publications and newsletters serving the nonprofit and faith community sectors.

Develop a PSA (public service announcement) and release to radio, print, and local cable TV media outlets.

Hold a press conference to inform the community about your plan. Be sure to inform statewide media as well as local sources that represent the communities you wish to serve. If you have received a Federal grant, members of your Congressional delegation may wish to participate. Their presence can help attract the media.

Ask other organizations (which work with the same target group of organizations) to provide the information via their mailing lists, on their websites, and in their newsletters.

Hold grant workshops, to which you invite target agencies, and where they will learn about your program and about how to apply for your grants.

Depending on your budget and staff skills, consider contracting with a public relations expert for assistance.

Provide support for applicants.

Many intermediaries view the subaward process as a training and technical assistance opportunity to help applicants further build their capacity in fundraising. They offer grant application workshops for this purpose.

A typical workshop agenda would include:

Introductions (this can help build solidarity among local organizations)

A program overview

The purpose of the grants

Eligibility criteria

Review of the RFP instructions

Review of the RFP sections

Your decision-making process and timelines

Overview of requirements and regulations regarding the use of Federal funds

Time for questions and answers

A writing exercise geared toward completing the proposal

To help foster cooperation and collaboration, consider asking each person who attends for permission to release their contact information to the others in attendance. Then, send the contact list to all that agree.

If your organization cannot or chooses not to provide formal training workshops or individualized technical assistance to support applicants, consider providing assistance online or by phone. Whether provided in person or remotely, any assistance could help to eliminate non-eligible applicants, make individual proposals stronger, and ensure accountability from your subawardees.

CHAPTER 4: Preventative Measures to Ensure Accountability

Providing training and technical assistance for potential applicants can go a long way to help ensure accountability from your subawardees. As an intermediary, your organization is responsible for making sure that all Federal funds provided through subawards are managed and monitored to ensure compliance with Federal requirements and regulations, and the funds are used in the manner for which they were approved. If subawardees violate Federal requirements, the requirements specified in their subaward, or otherwise improperly use the funds they receive, you as the grantor as well as the subawardee may both be subject to legal action. If a subawardee uses its funds fraudulently, it could be subject to criminal prosecution. It is therefore important to stay well-informed about your legal obligations, and those of your subawardees.

Here is a brief overview of some major legal obligations and issues regarding the use of Federal funds by grantees.

Since as an intermediary you may be making subawards to faith-based and community organizations, some of these issues specifically involve matters that rise up when faith-based groups receive Federal funds. Request guidance on these matters from your Federal program officer.

Financial reporting requirements. To make sure that grant funds are used properly, organizations that receive Federal funds must file regular financial status reports based on the requirements of the individual grant. At the time of writing, the basic financial report for Federal funds is a one-page document called Standard Form 269. (Programs are slowly phasing out the use of this form and replacing it with the Federal Financial Report). As a Federal grantee providing subawards, you will need to complete and compile financial reports on your subawardees and submit them on a regular basis. Accordingly, your subawardees will need to submit financial reports to you in the same format used for your own report. For more information about the Federal Financial Report (FFR) visit the Division of Payment Management website, http://www.dpm.psc.gov.

Support of only non-religious social services. A subawardee cannot use any part of a direct Federal grant to fund "inherently religious" activities which can include religious worship, instruction, or proselytization. Instead, organizations should use government funds to support only the non-religious social services that they provide. This doesn't mean the organization cannot have religious activities. It does mean that they cannot use taxpayer dollars to fund those religious activities.

Social services open to all eligible persons. If an organization takes Federal money, it cannot discriminate against a person seeking help who is eligible for the service. Religious organizations receiving public funds for a service that they are providing cannot serve only persons of their faith and turn others away. In addition, the faith-based organization may not require those they serve to profess a certain faith or participate in religious activities in order to receive the services they provide for the Federal government.

Ensure that organizations comply with Federal requirements and regulations.

The following provides some ideas on how your organization can take preventative measures, starting with soliciting proposals, to help ensure that the organizations that receive awards comply with Federal requirements and regulations.

Include all requirements and regulations in the RFP application packet and in supporting documentation. Be sure to explain all requirements and regulations clearly and directly and provide examples, if helpful. Consider requiring applicants to sign a statement indicating that they understand and agree to abide by these requirements.

Provide pre-award training on what receiving a Federal award entails. Be sure to cover the Federal requirements and regulations as well as reporting requirements, monitoring requirements, and restrictions on use of funds.

Make a site visit to the selected applicants (prior to finalizing an award) to ensure that all submitted documentation is correct and that the applicant understands the requirements associated with receiving the award. If it is not possible to make an on-site visit, consider setting up a conference call with organizational leadership (executive director, board president, etc.) to discuss their organization, the grant application, proposed project, and understanding of grant requirements.

Design a monitoring plan to oversee the subaward project and spending of subaward funds. Develop a memorandum of agreement for each subawardee that outlines subaward requirements for grantees. Be sure to include your obligations in the document, and have each party sign.

Develop intervention procedures to be implemented by your organization with the grantee if problems arise. Communicate those procedures clearly to all subaward candidates or include in the memorandum of agreement also known as a memorandum of understanding.

Investing the time to create a thoughtful, well-planned solicitation process will yield strong candidates for subaward consideration as well as strong subawardees to help achieve your overall program goals.

CHAPTER 5: Selecting Subawardees

Congratulations! You have designed your program, created an RFP, and solicited proposals. Now it’s time for the real fun: choosing your subawardees.
The following chapter will teach you to design your review process, recruit and train grant reviewers, conduct a thorough review process, and notify applicants of your decisions. The prospect of choosing from many deserving applicants may seem daunting, but don’t worry. With good planning and preparation you can transform this challenge into an exciting and rewarding experience for you and your reviewers.

Design your review process.

To make your review process work as smoothly as possible, you should develop standard and impartial review procedures for all proposals.

1. Develop review criteria and a review form. Refer to your RFP and the points that you assigned to each section. Then create a rating form to guide reviewers. The form should be broken down by proposal section. Each section should list the highest possible points that can be assigned and some criteria for evaluating and assigning points. Include some space for reviewers to make written comments.

2. Develop a procedure for pre-screening proposals. Remember, reviewers are usually volunteers, and you may want your reviewers to participate in future years of your program. Keep them on your side by screening proposals before they reach reviewers, and eliminating any that are incomplete or are from ineligible organizations.

Log each proposal into a spreadsheet or database. You should include contact information and the size of the request. Having an accurate database will help you greatly in the post-decision period.

3. Design your “decision day.” Consider using a neutral facilitator on this day, and carefully craft an agenda to guide you in making sound decisions.

Recruit and train reviewers.

1. Decide who will review proposals. Organizations often start to look for reviewers among staff members within their organization. However, you may want (and need) to consider inviting your organization's or your project partners' board members, volunteers, even funders and clients to sit on the review committee. You could also expand your recruitment to include community leaders, social service personnel, and/or faith and religious leaders. Some funders have rules about who makes decisions; be sure to check with your funding source before finalizing your reviewer team.

Estimate the number of reviewers you will need by the amount of letters of intent or calls of interest made by potential applicants. Ideally, reviewers should be familiar with faith and community-based organizations as well as the overall purpose of your project. However, the project purpose could be explained to those that are unfamiliar in the orientation session, which is the next step in your process.

2. Train the reviewers. To maintain consistency and standards throughout the review process, be sure to provide an orientation or training to all reviewers. It is best to offer that training to all reviewers at one time so that they may meet each other, learn from each others' questions, and discuss the process among themselves. At a minimum, the training should consist of four areas: 1) background on your organization and the project; 2) information on the subaward program; 3) information on the review and selection process; and 4) information concerning the announcements. You may want to allow two hours or more for training.

It is essential to ensure that there are no conflicts of interest between any of your reviewers and the organizations applying for the subawards. It would be improper for an employee, an officer, an "acting officer", and/or an immediate past president/chairperson of an applicant organization to be a reviewer on that proposal. Therefore, include information on avoiding conflicts of interest in the training.

Topics you might cover in an effective reviewer orientation are found in the following chart.

Conduct a thorough review process.

Once the reviewers have rated proposals, the process of making decisions begins. First, be sure that two or more reviewers have read and rated each proposal, so that more than one person’s opinion is brought to bear on decisions. There are many ways to handle this well. Each proposal may receive a score that is an average of the individual reviewers’ score. Or, reviewers may be asked to meet and discuss their mutual proposals, then assign one score for each.

Once you have a score for each proposal, it’s time to make final decisions. A reasonable way to do this is through a decision meeting (or, if location is an issue, through a conference call). For best results, ask a neutral party to facilitate this meeting, and carefully prepare an agenda in advance.

At the decision meeting, reviewers will share their scores for each proposal, and then proposals are ranked in order from highest score to lowest. You may have many more top scorers than you have grants to award. If so, the group of reviewers might discuss proposals further in order to refine the list. Finally, review the slate of finalists to make sure that the list reflects your program’s goals.

Before closing the meeting, thank the reviewers for their time and, in the interest of confidentiality, collect their copies of the proposals and their rating sheets. The rating sheets and their comments will help you give useful feedback to any unsuccessful applicants.

Announce the decisions.

In the final step in the review and selection process, announce your decision to three critical groups: the subawardees, the unsuccessful applicants, and the community.

Notify successful applicants by telephone and by letter. In the letter you might state the size of their award and invite the subawardees to an orientation session. Your letter should convey warmth along with information, and should let applicants know you are looking forward to working with them as they complete their projects.

In your letter to unsuccessful applicants, invite them to contact you to discuss their proposals and ways to improve for next time. Some intermediary organizations have provided one-on-one technical assistance to non-selected applicants over the phone or in a scheduled meeting at the applicant's request. Working with the unsuccessful applicants takes diplomacy and tact. It is important to be respectful of their efforts while providing useful feedback that may lead to future improvements. And always be sure to maintain their confidentiality in your communications; only the unsuccessful applicants and the reviewers should know why applicants were not selected.

Once all the applicants have been informed, let the community know about your decisions. Issue a press release to local media outlets, as well as to media contacts with publications and newsletters serving the nonprofit and faith communities. Consider holding a press conference with representatives from all or some of the successful applicants. (This is especially effective if your intermediary organization and the subawardees are concentrated in a particular community or area whose local media is eager and open for positive local stories.) Publish the list of subawardees on your website, and send a copy of the list to your organization’s staff and board of directors. Email a final list to the reviewers and partners, too. It is important that everyone who helped on the process is well-informed about the result and can help spread the word about your program’s accomplishments.

CHAPTER 6: Contracting with Subawardees and Distributing Funds

You now have a group of organizations that have been chosen to receive funds to carry out a particular project. It is important to create a formal agreement with each organization that specifies how the funds will be used, how they will be distributed, and any other requirements of your program. There are a number of ways to do this, but most involve a Memorandum of Agreement. However, your responsibilities as an intermediary do not end with formalizing the MOA. You must also monitor the funds to ensure the subaward remains in compliance.

Create a Memorandum of Agreement

A Memorandum of Agreement, or MOA, is a signed document that defines the agreement between you and the subawardee. It states the rights and obligations of each side. Before developing yours, check with your program officer to determine if there are any guidelines or restrictions about contracting with subawardees that you must follow for your particular grant.

1. Decide how you will distribute funds. The Memorandum of Agreement should describe the way that you, as the organization sub-granting funds, will distribute funds to the subawardee.
Some of the ways that you might distribute funds include the following:

Distribute the award payment in installments based on the receipt of financial and progress reports from the subawardee.

Provide the award payment in one installment at the beginning of the project period.

Distribute the award payment in two or more installments; for example, provide one payment at the beginning of the project period and another payment at the mid-point or at the end of the award period. Tie the second payment to your review and approval of expenditures to date.

Since in many cases you will be working with organizations that have received little or no public funding, it can be a very good idea to tie fund distribution to the receipt of complete and accurate reports.

2. Define the subawardee’s obligations. The MOA should also define the proper use of funds, any required participation at training and technical assistance events, and any required participation in your evaluation. It should also spell out reporting requirements. The MOA should include a project budget, as well as expected activities, outcomes, and indicators for the grantee’s project.

3. Describe consequences for non-compliance. Be sure to spell out the actions you will take if a subawardee falls out of compliance with the agreement. What happens if a subawardee fails to send representatives to required meetings? Does an incomplete financial report trigger a site visit or an audit? Failure to submit timely and accurate reports is a serious problem, and could justify termination of the agreement. Think about which parts of the MOA you wish to enforce, and include language to describe enforcement. A sample MOA is included in the Appendix.

4. Describe what you will do for the subawardee. Here you might list the training and technical assistance available, quarterly networking gatherings, or other special opportunities you will offer the subawardees. Remember, they probably need more than just the grant, so carefully consider what else you will provide.

Monitoring subawardees.

As a sub-grantor of funds, you are responsible for ensuring that the organizations receiving those funds are in compliance with Federal requirements (or your other funders' requirements), as well as with the terms your Memorandum of Agreement. To fulfill that responsibility, your organization should establish an oversight and monitoring plan for your subawardees.

1. What to monitor. To ensure that subawardees comply with the requirements of your program, your organization will need to be sure of the following for each subawardee:

Project progress is consistent with the approved proposal and with the MOA.

Subaward funds are used for approved purposes only.

Subaward funds are not used for inherently religious purposes (if that is applicable to your project).

Subaward funds are accounted for appropriately.

2. Reporting requirements. For effective monitoring of grants and subawards, it is essential that subawardees should be monitored throughout the project period. There are a variety of ways that your organization can provide regular and frequent monitoring for subawardees. Reporting is one common way that intermediaries monitor the progress of subawardees.

Be sure to require regular programmatic and financial reports from subawardees. Your organization should provide a standard reporting form or template for subaward organizations to complete and send to you on a scheduled basis. Reconcile these reports with what is required by your funder, and ask your subawardees for information you’ll need to complete your own reports to your funder. Make sure that the reports arrive in enough time for you to incorporate them into your reporting schedule. Some intermediary organizations require quarterly or even monthly reports from subawardees. Remember, you are responsible for the appropriate use of the funds, so don’t be afraid to ask for what you need as often as you need it

As part of your regular reporting requirements, ask organizations to report on how the funds are spent, and be sure the expenses reported are in line with the budget included in the MOA. Consider asking for documentation, such as invoices and receipts. Subawardees should also report on their activities and on progress made toward the project outcomes listed in the MOA. It is a good idea to collect stories of the impact of your project, so ask for relevant stories from your subawardees. These stories of impact will not only help in your reports to your funder, but they can be shared to motivate and inspire other subawardees.

Remember that your subawardees are probably new to reporting requirements, so make the forms as simple as possible, and include clear and concise instructions. Make the reporting deadline clear, and be fair but firm about compliance. You might hold an orientation meeting for all grantees where you preview reporting requirements and review the forms, answering any questions and explaining why regular reporting is necessary.

4. Other ways to monitor. In addition to reporting you might use these other methods of monitoring your subawardees:

Contact subawardees regularly by phone or through email to ask how their projects are going, and to offer your help and advice. This can be done on monthly, bimonthly, or quarterly.

Hold regular meetings or training events for subawardees. These provide an opportunity for skill building, for sharing of information among awardees, for monitoring progress, and may help you detect any issues or problems experienced by subawardees.

Assign a "mentor consultant" from your organization (or your training and technical assistance consultant pool, if you are using external consultants) to work with the subawardee and to provide scheduled reports on its progress.

Hold on-site visits throughout project period. This may only be possible if awardees are located in a geographic area that is accessible to the grant-making organization.

Conduct a subaward program audit. This requires that each subaward recipient provides access to its records and financial statements, as necessary. You may want to consider periodic audits at the beginning of the project period to make sure that appropriate accounting procedures are in place, at a mid-point, and at the end of the project period.

Monitoring subawardees may be the least enjoyable, but the most important, part of your program. Doing it well can ensure a highly successful subaward program.

CHAPTER 7: Common Problems and How to Solve Them

Even the best-planned subaward program can encounter bumps in the road. Common types of problems faced may include projects that stall, projects making insufficient progress toward outcomes, subawardees that are not in communication, noncompliance with program requirements, and improper use of program funds. Through this chapter you will discover strategies to troubleshoot the common problems encountered while managing a subaward programs.

Projects that stall.

Sometimes a subawardee will begin a project with energy and enthusiasm, but hit a full stop before the project’s complete. If you have built enough good will with the organization, they will feel comfortable turning to you for help. More likely you will notice that their progress reports are thin, with little evidence of effective activity.

Stalled projects are not that unusual, but you should intervene as soon as possible, and help the organization get back on track. Here is one possible intervention process for you to consider.

Describe the problem tactfully but directly to the subawardee.

Call a meeting to work out a solution.

Detail your concerns at the meeting, and ask what is causing the delay.

Re-state the problem in your own words, and check for accuracy.

Ask the subawardee to suggest solutions. Decide what help your organization can give, and offer it. Then, decide together on what steps will be taken to correct the problem.

Create a written document that states the problem and the steps each party will take to correct the problem. Include any deadlines and any consequences for not following through.

Have both parties sign the new agreement, and monitor the subawardee’s progress.

Insufficient progress toward outcomes.

You could address this issue with the intervention process described above. Just be sure to:

State the problem clearly.

Reach agreement on solutions.

Offer your organization’s assistance.

Create and sign a written agreement.

Monitor compliance with the agreement.

Subawardees that have stopped communicating.

If faced with subawardees that have stopped communicating, you might simply send written communication to the last known e-mail and mailing address. Send your e-mail or letter with receipt confirmation requested. Ask the organization to answer by a certain deadline. You might also visit the physical location to express your concerns in person.

If the deadline for responding passes with no communication from the organization, it might be time to terminate your agreement with the organization. Contact your Federal or other program officer for guidance on how to proceed.

Noncompliance with program requirements.

Depending on the severity of this problem, you may have to exercise your right to terminate the organization’s participation in the program. If you do so, be sure to put the termination and your reasons in a letter that you send to the organization. In less severe cases, you could troubleshoot according to the process found above.

In cases of noncompliance, it is vital to notify your program officer of the problem, and to seek their advice. The program officer may be aware of greater consequences for the subawardee, particularly if your program subawards Federal funds.

Improper use of subaward.

This is another instance where your actions will depend on the severity of the problem. If the subawardee has spent a small amount of money on non-related supplies, they might reimburse the project with other organizational funds. A faith group that uses Federal funds to purchase religious materials, however, has put your program in jeopardy. The consequences, therefore, are much more serious.

For serious violations, it will be important notify your program officer about the problem and ask for guidance on how to proceed. You will likely need to terminate the subaward, and provide written support to your funder for your decision.

Summary

By now you should be able to identify the key components of a subaward plan. From implementing outreach strategies to troubleshooting common problems encountered when working with your subaward program, you are now better equipped to successfully design and manage a subaward program. Thank you for taking the time to learn about designing and managing a subaward program.

You are now equipped to lead an intermediary organization.

Over the course of this lesson you have been introduced to a tremendous amount of information that will equip you to lead an intermediary organization. From creating a subaward plan to contracting with subawardees you have now been exposed to the technical information as well as strategies to tackle the nuances of managing a subaward program. Developing a request for proposals process, providing technical service as part of your outreach strategy, designing a review process for selecting subawardees, and monitoring subawardees following the distribution of funds are just a few topics this lesson has covered. Refer back to this lesson as necessary and utilize the helpful jobaids you have downloaded to help you successfully manage your program.

Good Luck!

Good luck with your subaward program. You are about to provide tremendous resources to your community. It will almost certainly be an exciting and rewarding learning experience for you and your organization.